Generac Holdings Inc.
Generac Holdings Inc.
Generac Holdings Inc. (NYSE:GNRC) is gaining momentum in its efforts to evolve from a traditional generator manufacturer into a major power infrastructure supplier for the rapidly expanding data center industry. On September 16, the company announced a long-term supply agreement to provide backup generators for Amazon data centers.
The agreement represents a potentially significant catalyst for Generac, with deliveries expected to be worth approximately $2.4 billion in 2027 and 2028. Generac also issued a warrant to Amazon NV Investment Holdings to purchase up to 1.69 million shares of Generac common stock at an exercise price of $200.93 per share.
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Following the announcement, shares of Generac moved higher as investors assessed the potential impact of the agreement on the company’s data center growth prospects.
In a September 16 research note, Cantor Fitzgerald reiterated its Overweight rating on Generac and maintained a $333 price target. The firm described the long-term supply agreement as an important data center disclosure that is central to the investment thesis surrounding the company.
Amazon Deal Expands Generac’s Data Center Exposure
The rapid expansion of Amazon.com, Inc. (NASDAQ:AMZN)’s cloud computing and artificial intelligence infrastructure is creating additional demand for reliable backup power systems. Generac is positioned to benefit from this trend as data centers require resilient power infrastructure to maintain operations during grid disruptions.
The opportunity builds on an already substantial data center business. When Generac Holdings Inc. reported second quarter results, it noted that its backlog had reached a $1.6 billion backlog, excluding committed volumes from its second hyperscale customer, for products serving the data center market. The Amazon agreement therefore provides an additional avenue for the company to capitalize on growing hyperscale data center investment.
The agreement could also improve Generac’s revenue visibility over the next several years while increasing its exposure to hyperscale customers and AI-related infrastructure spending. Generac has been investing in additional manufacturing capacity to address this demand, including plans to invest roughly $250 million through the end of 2027 to expand production capacity.
Averytin News Financial update.